Correlation Between Global X and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco SP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X NASDAQ and Invesco SP 500, you can compare the effects of market volatilities on Global X and Invesco SP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco SP.
Diversification Opportunities for Global X and Invesco SP
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X NASDAQ are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Global X i.e., Global X and Invesco SP go up and down completely randomly.
Pair Corralation between Global X and Invesco SP
Given the investment horizon of 90 days Global X NASDAQ is expected to generate 0.69 times more return on investment than Invesco SP. However, Global X NASDAQ is 1.45 times less risky than Invesco SP. It trades about 0.11 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.06 per unit of risk. If you would invest 1,298 in Global X NASDAQ on September 2, 2024 and sell it today you would earn a total of 524.00 from holding Global X NASDAQ or generate 40.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X NASDAQ vs. Invesco SP 500
Performance |
| Timeline |
| Global X NASDAQ |
| Invesco SP 500 |
Global X and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco SP
The main advantage of trading using opposite Global X and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco SP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco SP will offset losses from the drop in Invesco SP's long position.| Global X vs. Global X Russell | Global X vs. JPMorgan Equity Premium | Global X vs. Global X SP | Global X vs. NEOS ETF Trust |
| Invesco SP vs. Invesco Global Listed | Invesco SP vs. Invesco DWA Momentum | Invesco SP vs. Invesco DWA Developed | Invesco SP vs. Invesco DWA Emerging |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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